China needs more stimulus measures in addition to its 4-trillion-yuan (US$586 billion) package to boost the economy amid the global financial crisis, a top policy advisor said yesterday.
Zheng Xinli, vice-director of the Policy Research Office of the Central Committee of Communist Party of China, said the economic downturn was already bottoming out in the country but "it's still necessary to increase the investment to bolster the sagging economy".
China's GDP in the first quarter of this year will be higher than the 6.8 percent year-on-year growth recorded in the fourth quarter 2008, Zheng said on the sidelines of the annual sessions of the Chinese People's Political Consultative Conference (CPPCC), which opened on Tuesday.
Premier Wen Jiabao will announce new measures to stimulate the economy at today's National People's Congress (NPC) meeting when he delivers the government work report, said a Bloomberg report quoting Li Deshui, former head of the National Bureau of Statistics.
The country released its massive economic stimulus package on Nov 9, 2008, with an initial investment of 100 billion yuan (US$14.6 billion).
Li Zhaoxing, spokesman for the Second Session of the 11th NPC, said that 30 billion yuan from the initial investment had been extended while the remaining 70 billion yuan will be included in the budget for this year, which will be approved at the ongoing session.
The country will adopt other policies this year to stimulate economic growth, Li said at a press conference.
China plans to amend the its tax code to boost consumption, spur exports and generate more transactions in the equity market by reducing the 0.1 percent stamp tax on share trading, he said.
The country lowered the duty from 0.3 percent to 0.1 percent last April and exempted share purchases from tax in September.
"We will lower the stamp duty rate on securities trading," Li said, without elaborating.
Li added that the government will take measures to ensure government funding is used efficiently for stimulating economic growth.
However, analysts warned that "over-spending could lead to undesirable results".
"The government's stimulus plans are certainly necessary as the economy slows," said Li Zhikun, a senior analyst with the China Jianyin Investment Securities Co. "But such a massive scale of government spending may crowd out private investors."
It would affect the efficiency of the country's overall investment, he added. Analysts also said that the country's environmental protection drive should not be jeopardized in its pursuit of a stable economic growth.
(China Daily March 5, 2009)